Business asset valuation

Two more questions:
1. We receive an annual payout from a business; it's not income in the traditional sense that one of us is employed and earns it but it is an income stream. What's the best way to represent this in ESP? I've put this in as an annuity under "Special Receipts"

2. This business currently has a cash reserve that will pay off when the business is sold or shuttered. It's a 6 figure asset. How should this be represented in ESP? I'm assuming in "special" under receipts with an estimated date the business will sell.

Comments

Yes, special receipts is the way to go here. Just get the tax consequences right when you enter it. There will be no payroll taxes (FICA, etc) taken out as a special receipt. So in that sense it's not "earnings."

In #2 of course you'll have to pick a year to shutter the business for the sake of your model.

Thanks again; I picked a year to add the business payout and would like to use those funds to payoff our remaining mortgage (see my next question). Again, I have read some of the other responses about mortgage payoffs but there doesn't seem a smooth way to keep the asset and have it grow from it's value at the time of payoff with a simple lump sum mortgage payoff. Setting up a 2nd primary home (for zero $ cost as was proposed in one answer) would not reflect the value of the now fully paid off house. The system requires a mortgage for the 2nd primary home. I can "fudge" my way there by putting a full $ one year mortgage in which magically gets paid out in one year without apparently impacting cash flow. I just want to do it the right way and would love any suggestions.

I do believe the second home is the way to go. Use a 100% down. I believe that if you look at your existing mortgage report and use the amount that you see at the end of the fifth year from now, that would be the cost of the second home. After you put in the numbers, you can look at the housing report and should see just the taxes and insurance remaining with a hit on your regular assets that reveals the cost of the second home.

Thank makes sense but how do I get the asset value back to what it should be?

Let's say I have a home with a value of $500K and a mortgage of $200K at payoff time, so an equity value of $300K. If put in the cost of the new home at $200K, then several things happen that might not be workable.

1. House value is $200K, not $500K
2. The balance of the equity in the asset, $300K, goes where? into other assets? into what reports?
3. This shows a liquidity that doesn't reflect reality.
4. In my case, my home is waterfront so it appreciates at more than an average rate and I would not have to trick my other assets appreciation for the portion of the $300K to match overall expected appreciation and I also am not sure how to use this for cash management.

I appreciate your help but I want to try as hard as i can to make the reports reflect the real world.

Glad this helped Steve. There's always something new to learn about ESPlanner and how to apply it to your specific situation. Sometimes it takes time to research and think it through along with making use of the forum. Good luck!

I'm 3 years from retirement and my wife and I needed to know if we were on track financially. ESPlanner has allowed us to enter our income, assets, and liabilities and has provided us with a level loaded projection of how much money we will have available to spend each year in today's dollars. There are lots of unknowns in anyone's future, but with this program, I feel like I can track where I am financially.

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